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Retailers Are Paying The Dues For Past Handling Of The Workforce

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The retail industry has a serious problem on its hands; sales are going up and pressure from new consumer shopping options is creating a need for more – and more skilled – labor in the stores, while pandemic-weary workers are basically saying, “We’re not gonna take it!”

To come to this conclusion, I don’t have to look any further than the local supermarket. Despite a pretty robust amount of foot traffic in the store (to say nothing of all the Instacart order fulfillment people clogging up the aisles) only about half the checkstands are typically opened and usually there isn’t a bagger to be seen. The result is predictable: no matter what time of day I go there, shoppers are backed almost to the center aisle with their shopping carts. I’ve asked the checkout clerks on several occasions what the issue is, and the answer is invariably the same: “no one wants to work here.”

The reasons for that are more complex than the low-pay-lousy-hours issue that has forever characterized a retail job. Employees are increasingly fed up with the treatment they are getting from customers and the tone-deafness of their employers. In a recent article in the UK Guardian that highlighted the situation at California CVS stores, one employee complained that “…CVS workers have worked throughout the pandemic and constantly struggled with understaffing, which has made it difficult to enforce coronavirus safety protocols…It’ll be me and a cashier every day, and we have no way to man the door to make sure people are wearing masks… We have at least 10 to 15 confrontations every single day’.” CVS hasn’t helped its own cause much; the same article pointed out that while the company has recorded record profits in the last 18 months, it offered a 5 cent (not percent) pay raise to most workers in recent trade union negotiations. You can guess how that has gone over.

It’s a classic chicken-or-an-egg problem: is the work environment so bad because there aren’t enough workers, or are there not enough workers because the work environment is so bad? One gets the distinct feeling that the retail industry is about to pay some heavy dues for being so tightfisted about the cost of labor in the past. Back to CVS for a moment, the company is apparently trying, but failing, to shore things up, as one disgruntled employee described in a recent post on Reddit:

Is everyone else’s district on fire?… Unlimited payroll hrs, unlimited paid overlap, and all OT <overtime> approved for the first time in history but without any available employees we are closing multiple pharmacies and front stores early, closing drive thru, shutting off phones, turning down vaccines, 50-100+ pages behind, turning off virtual verification, cancelling COVID testing, no PCQ <Patient care queue> calls made for months…. Now we are somehow expected to staff for additional COVID vaccination booster and flu clinics starting beginning of October but the HR and hiring center backed up by an additional 3-4 weeks….”

The labor challenges go far beyond a single retailer, or even a single market. It’s a global problem that is going to get worse before it gets better. In a recent article, retail guru Walter Loeb wrote, “The labor crisis highlighted by the Department of Labor poses a huge problem for the retail industry. Of greatest concern, it points to a shortage of labor that will get worse during the coming important holiday season. Currently, the Department of Labor estimates that there are about 965,000 open jobs in the retail industry.”

According to Salesforce, retailers are expected to try to spend their way out of this problem:

“With an imminent shopping spree kicking off during back-to-school season, we anticipate that the retail industry will continue to spend more on wages to ensure staffing well into the holiday season. We estimate that U.S. brands and retailers will spend $47 billion in additional wages for store associates in November and December compared to the same period in 2020.”

That seems like a safe prediction. In response to labor market conditions, companies like Walgreens and Sam’s Club have raised their minimum wage to $15/hour. The real question is, is that too little too late? There’s a strong sense that money isn’t the issue – job satisfaction is the issue. That’s a complex thing; it means not only a good paycheck and decent benefits, but also safe work environment and a company that offers some future growth potential that will help improve an employee’s life.

In the same article quoted above, Salesforce also predicted that a new type of labor will be required in retail stores:

The role of the store associate has… broadened to:

  • Fulfillment experts: picking and packing online orders
  • Customer service agents: providing service, advice, and clienteling — in store and at home
  • Ecommerce specialists: enabling an endless aisle for customers that did enter the store
  • Social media managers: becoming brand advocates within their personal networks

…The continued blurring between the physical and digital experiences opens the possibility to redefine the associate’s role. This marriage brings greater opportunity for job satisfaction, upward mobility, and unique experiences for career development.”

But defining a new role for store associates won’t be enough. A new attitude on the part of retail management has to come with it.

The Past Is Catching Up With Retailers

RSR’s November 2020 benchmark on retail workforce management practices summed up the hard truth about working in retail:

“Retailer practices, in general, have reflected a business model that presumes a transient, mostly part-time workforce. Employees (most especially those working in stores), were hired quickly, undertrained, underpaid, and undermotivated to be great at what they do and the role they perform. Unsurprisingly, they moved on just as quickly. Retail turnover, most especially in the United States, has been high for a very long time. This has been revealed in every workforce management study RSR has conducted since 2007.

“Many retailers had neither invested the funds nor training required for their workforce to meet the challenges 2020 brought at scale. When the COVID-19 pandemic struck the world in March of that year, these trends not only accelerated, but accelerated at warp speed. Many of the employee-rich functions retailers had been ignoring for far too long came home to roost. Now retailers have to change. The way employees are viewed, compensated, bonused, and overall treated really must change – lip service simply will not do any longer.

Can the tiger change its stripes? Ironically, it may become a moot point before too long. Although many (including the RSR team) took a dim view of fully automated cashier-less stores such as Amazon Go when they began to show up in 2018 (our rationale: retailers wouldn’t spend for the tech required) the concept – along with the even more derided self-checkout technologies that have been available in supermarkets for years – has gained some traction. A new example of the concept opened a few weeks ago in Dubai compliments of European retailer Carrefour, and Supermarket News recently announced that several Whole Foods stores will soon feature Amazon Go’s “Just Walk Out” payment system.

You can rationalize this in a number of ways (for example, the cost of maintaining a labor force is higher than then cost of automating the store), but the underlying cause may be that just like retail employees, consumers are tired of the status quo and are willing to try something new. That should alarm change-resistant retailers. If there’s anything we should know by now, it’s that once consumers grab on to a new technologically enabled way to close the gap between wanting something and getting it, they’ll won’t give it up.

Newsletter Articles September 21, 2021
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